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How To Start Trading Cryptocurrencies In Nigeria or Africa: Guide

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How To Start Trading Cryptocurrencies In Nigeria or Africa: Guide

How To Start Trading Cryptocurrencies In Nigeria or Africa: The Complete Guide | Image Source: Pixabay

Cryptocurrencies, initially feared to be a bubble that could burst soon, have taken the world by storm. First, it started with the creation of Bitcoin in the year 2009 which was initially valued at the starting price of between $0.0008 to $0.8 per bitcoin because its early price was not properly documented and rose to a peak of $65,000 in October of 2021 and rising ever since.

The implication of this was that anyone who spent $100 to purchase bitcoins at $1 each at its inception in the year 2009 would have been able to acquire 100 units of bitcoins which would have been worth about $6,500,000 at the time of its peak.

Ever since the inception of Bitcoin, over 13,000 different cryptocurrencies have been created around the world and the market capitalisation of the cryptocurrency world crossed $2 trillion dollars at the time of writing this article.

Since the creation of cryptocurrencies, thousands of people globally have made millions of dollars trading them, and many more have made hundreds of thousands of dollars. Even more exciting, some of the people who have made millions of dollars spent a few hundred dollars to acquire the cryptocurrencies that changed their fortunes.

If you’re looking to learn how to trade cryptocurrencies whether in Nigeria, Africa or anywhere around the world, this article is for you.

 

What Are Cryptocurrencies?

Cryptocurrencies are digital currencies that are also used as a form of payment like fiat currencies (national currencies issued by countries). The difference between the two is that cryptocurrencies are digital, limited in supply, and the transactions are verified and recorded on a decentralised network called a blockchain, using cryptography, as opposed to fiat currencies that are unlimited in supply and are maintained by a centralized authority called a central bank.

 

Types of Cryptocurrencies

There are three types of cryptocurrencies. They are:

1). Bitcoin:

Bitcoins are the original cryptocurrency to hit the digital world. They have the largest capitalization to date and are even now official currencies of some countries like El Salvador and also accepted by nations like Iran for international trade. Many governments worldwide recognise the importance of bitcoin and some government and private officials receive their salaries in the cryptocurrency today.

While bitcoin was the original cryptocurrency, it laid the foundation for other cryptocurrencies to come up, and to date, there are now over 13,000 different types of cryptocurrencies that are in use in one form or the other, worldwide.

2). Altcoins.

Altcoins, also called alternative coins, are all cryptocurrencies other than bitcoin. there are over 13,000 of them in circulation, with Ethereum being the second largest and also owning a blockchain network where many other altcoins were built on. Some of the top altcoins in the world are:

  • Ethereum (ETH)
  • Binance Coin (BNB)
  • Solana (SOL)
  • Cardano (ADA)
  • XRP (XRP)
  • Polkadot (DOT)
  • Dogecoin (DOGE)
  • Avalanche (AVAX)
  • Shiba inu (SHIB)
  • Litecoin (LTC)

And thousands more

3). Stable Coins:

Stable coins, unlike traditional altcoins are cryptocurrencies whose prices are stable and do not easily fluctuate. They are usually pegged against a fiat currency like the US dollar or against other units of financial measures, and as such, their prices are mostly always pegged at $1 for each.

The implication of this is when the market is crashing, a cryptocurrency trader could quickly sell their cryptos and receive a stable coin in return, so that they can then repurchase the cryptocurrency at a lower price later by using the stable coin value they bought earlier.

In simple terms, buying a stable coin is like buying the digital version of the US dollar.

If you’re going to purchase crytpocurrencies on an exchange, you’d need to purchase a stable coin or use Bitcoin or Etherum to purchase the coin.

Some of the top stable coins available are:

  • Tether (USDT)
  • USD Coin (USDC)
  • Binance USD (BUSD)
  • TerraUSD (UST)
  • Dai (DAI)
  • TrueUSD (TUSD)
  • HUSD (HUSD

And several others

See Also: The Rise of Blockchain in Africa

 

How To Buy Cryptocurrencies

Understanding the opportunities that cryptocurrencies provide is one thing, but knowing how to purchase cryptocurrencies is another thing. To know how to purchase cryptocurrencies in Nigeria, Africa, or anywhere around the world, you can follow the steps below:

Step One: Register With A Cryptocurrency Exchange

There are two types of cryptocurrency exchanges. They are:

1). Centralized Exchanges (Spot & Derivatives):

These cryptocurrency exchanges are regulated and require a form of KYC on the part of the person signing up to trade on their platforms. They usually have millions of users and generate trading revenues ranging from hundreds of millions of dollars to billions of dollars yearly.

Some of the top centralised cryptocurrency exchanges are:

  • Binance
  • Kucoin
  • Coinbase
  • FTX
  • Kraken
  • Huobi
  • Bitfinex
  • Gate.io
  • Hotbit
  • LBank
  • Gemini
  • Crypto.com Exchange

And over a hundred more.

2).  Decentralised Exchanges (DEX):

Decentralised exchanges are nonregulated and do not require any form of KYC on the part of the trader. These exchanges operate anonymously and every transaction that goes on, while registered on the blockchain network, is very anonymous.

While centralised exchanges trade popular coins, decentralised exchanges trade the early coins that first enter the market and also the popular coins. So they’re the best places to usually purchase cryptocurrencies very early before they blow up in value.

Some of the top decentralised cryptocurrency exchanges are:

  • Uniswap
  • Pancakeswap
  • dYdX
  • TraderJoe
  • SushiSwap
  • Quickswap
  • Shibaswap
  • Kine Protocol
  • Honeyswap
  • Spookyswap
  • Radium

And over 100 more.

This step by step guide will focus on how to purchase cryptocurrencies from centralised exchanges.

 

Step Two: Purchase A Stable Coin 

Since we’ve earlier established that stable coins are pegged to the US dollar, you’d need to first purchase them on a centralised cryptocurrency exchange like some of the examples above.

Some cryptocurrency exchanges offer the option of purchasing stable coins via a peer to peer (P2P) network where users on the P2P network make payment via bank transfer and the platform automatically releases the crypto from escrow to the buyer after the seller confirms they have received the payment. Or you can buy the stable coin via credit card on some of the platforms depending on if your country is supported for credit card payments.

When you purchase the stable coin, you’d then use it to trade on the cryptocurrency exchange with the trading pair of the cryptocurrency you want to purchase by inputting the price you want to pay and the total amount you’re willing to spend, which would automatically determine the quantity of the cryptocurrency you’d get.

If you select a price that’s ower, the purchase will go through if the price comes down. If the price is higher, the purchase will almost go through immediately.

In some cases, you may be able to use a debit or credit card to purchase the cryptocurrency directly, but only if your country is supported.

 

Step Three: Hold Or Sell Your Cryptocurrency

It’s always best to hold the cryptocurrency over the long term because historically, the price always goes up, and a lot. If you don’t understand the dynamics of spot trading, it’s best you buy and hold the cryptocurrency for a very long time, so that you can maximise your margins from it. For instance, if you bought $100 worth of the Shiba Inu cryptocurrency in November 28th, 2021 at the price of $000000000056, you would have purchased 1,785,714,285,714 units, and sold at the price of $0.00003932 at the time of publishing this article (November 29th 2021), you would have made $70,214,286, all from a $100 investment in one year.

But if you do understand how to study the market, when to buy and when to sell, you can sell your crypto through the same channel you used to purchase it by instead selecting the sell option and following the same procedure.

Some methods of making money trading cryptocurrencies including the previously discussed are:

  • Buying to hold
  • Spot trading
  • Futures trading
  • Staking
  • Cryptocurrency mining

And much more that will be discussed in the next cryptocurrency article.

 

How To Store Your Crytpocurrency

There are popular methods of storing your cryptocurrencies. They are:

1). Hot Wallet Storage:

This storage method simply means to store the cryptocurrency online. To store it online you’d need to store it on either of the following:

  • A centralised exchange like the examples mentioned in the previous section
  • A wallet account like Trustwallet, Metamask, and the likes, which you could also use to trade on decentralised exchanges

While hot storages are the most popular methods of storing cryptocurrencies, they’re also the most insecure because they’re online and can be hacked remotely with all the cryptocurrencies in them stolen.

2). Cold Wallet Storage:

A cold wallet is simply an offline method of storage where the cryptocurrencies are stored on a special type of flash drive. By storing on a flash drive, it means that the cryptocurrencies are safe from online attacks. But if the flash drive is stolen, gets corrupt, or gets missing, the cryptocurrencies are gone.

Some of the most popular types of cold storage flash drives to buy for storing your cryptocurrencies are:

  • Ledger Nano X
  • Trezor
  • CoolWallet Pro
  • KeepKey
  • Ellipal Titan

 

Challenges In Cryptocurrency Trading

1). Volatility:

The market is highly volatile and while the price of a cryptocurrency can go up or down by 20% in a day, it can also go up by 10,000% in a day and crash by 99.99% the same day.

2). Theft:

The rise of cryptocurrencies has also increased the number of cyberattacks on cryptocurrency exchanges. Since a majority of the cryptocurrencies are stored on the internet, they are susceptible to advanced remote attacks, and several times in the past, some of the top exchanges have been victims of the attack.

3) Technical Knowledge Is Required:

Owning and trading cryptocurrencies requires a form of advanced knowledge from knowing how to sign up to an exchange to knowing how to carry out research, how to choose the right cryptocurrencies to buy, how to secure your account and much more.

4). Regulatory Issues:

Some governments worldwide are actively fighting the trading of cryptocurrencies in their countries and this is putting a lot of people on edge on whether to own the digital currency or not.

 

To Sum It Up

Cryptocurrencies have come to stay and will be the future of money. It could someday become the defacto method of exchange and those who miss out on purchasing them today, like those who missed out a year ago or 13 years ago, will have to start from scratch on purchasing them in the future, while a lot of people who purchased them today for even a few hundred dollars would own cryptocurrencies worth millions of dollars in a few years.

 

What are your thoughts on this article on how to start trading cryptocurrencies in Nigeria, Africa, or anywhere around the world? Let me know by leaving a comment below.



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